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Federal regulators allege a St. George man raised up to $25 million for a fraudulent foreign currency trading scheme, including taking investor monies after the company reported massive losses.
Clifton K. Oram, 44, raised about half of the $50 million invested in the MexGroup, a Mexico-based company run by a fugitive U.S. citizen wanted on criminal charges in an apparently unrelated Ponzi scheme.
In a lawsuit filed this week in U.S. District Court in Salt Lake City, the Securities and Exchange Commission alleges Oram was not licensed to sell securities and failed to do any significant research into MexGroup's claims of fantastic profits before he began pitching it to investors.
It says Oram received payments from MexGroup in return for investments garnered by about 15 sales agents affiliated with his companies, KCM Partners and Adelaide Partners.
Oram could not be reached for comment. Some of the money he raised came from Utahns, but court documents do not specify how much. The SEC did not respond Tuesday to a request for more information.
MexGroup, run by fugitive Gary L. McDuff, who also goes by the name Gary Inman, claimed annual returns of up to 44 percent. But the agency said trading records show it lost $1.6 million in 2006 and more than $4.5 million in 2007.
"In November 2008, MexGroup notified its customers that virtually all of their money was lost," the complaint says.
Even after MexGroup reported the staggering losses, Oram and KCM sales agents continued raising money for the company, the lawsuit said.
MexGroup gave out various and inconsistent stories over the next several months about what had happened, the complaint says, including statements about supposed lawsuits it was filing to recover investor monies.
"These facts should have alerted Oram to potential fraud by MexGroup," the complaint says. "Nevertheless, he made no attempt to verify any of the information contained in the litigation updates MexGroup sent to investors."
The SEC is seeking unspecified fines, a permanent injunction prohibiting Oram and others from further violations of securities laws, and an order that he repay illegally obtained funds.
Also named in the complaint were Don C. Winkler, 77, a former Tucson resident who the SEC believes is now in living in Panama, and William R. Michael, 51, of San Jose, Calif.
In 2009, Oram and KCM were fined $12,500 by the Utah Division of Securities for his role in selling $5.7 million worth of investments without a license and providing false information to investors in a company called Audience Alliance, which was to produce family-friendly films.
In 1994, McDuff, was convicted of money laundering in Texas. He is a defendant in a pending SEC case involving an earlier "high yield" investment. He also was indicted last year in Texas on criminal charges related to a Ponzi scheme.